The New Golden Egg

The New Golden Egg

The headline of the May 1988 issue of InsideFlyer read, “United’s Frequent Flyer Bombshell.” Flash forward to May 2006 and the headline still might read the same. But what a difference 18 years makes. At that time United was creating a new direction for Mileage Plus with the introduction of expiring miles, though mitigating that change with new lower awards for only 20,000 miles (precursor to today’s 25,000-mile award). Well, United has dropped another bombshell for Mileage Plus called Mileage Plus Choices, and this time the bombshell just might portray a general directional shift on how these programs look at reward redemption.

In this story, we’ll take a look at the benefits this new program offers Mileage Plus members, as well as tips on how to use the program, and take a look at how this program came about and where it fits into defining what may possibly be a trend for other programs. Regardless, this is in our opinion the most revolutionary change since the bombshell in 1988 for United’s Mileage Plus program, and frankly, as things may turn out, revolutionary for the rest of the industry as well.

But before we get carried away with advice on how to use this new benefit for Mileage Plus members, let’s take a look at where this might have come from.

Essentially it has two parents-the Delta Air Lines SkyPoints credit card and the Air New Zealand Airpoints award redemption program (And, to be fair, on the pure award redemption side in which members can use their miles as money to purchase airline tickets, GlobalPass, since it’s transformation from LatinPass has had some success with this model over the past three years).

But to compare apples and other forms of apples to each other, let’s take a look at what we believe to be the parent of this particular program. Enter the Delta Air Lines SkyPoints credit card. We’ve written about it upon its launch and in fact, in the Jan. 2006 issue of InsideFlyer, we had this to say about the SkyPoints card: “Best Idea Today: SkyPoints credit card from American Express. OK, we do beat up on SkyMiles from time to time but this new credit card product does have some promise, since it easily checkmates some of the challenge by CapitalOne, in that members can earn no-blackout date award travel and leverage their spending for real dollar savings against airfares they shop for.”

It was either too early, or either Delta or American Express had the vision to push that product further, since it has languished from much public view. While it has a back door relationship with the Delta SkyMiles program, at first it was an extremely distant mention and the card was not initially even featured or mentioned on the Delta.com Web site, only the American Express Web site.

The details of that program are:

  • Discounts on Delta flights for as few as 3,000 SkyPoints
  • Get up to 2,500 SkyPoints with your first purchase
  • Always Double SkyPoints on everyday purchases
  • One SkyPoint for every other eligible dollar spent
  • No Annual Fee for the first year

    The concept was clear. American Express and its partner Delta Air Lines had apparently had enough of the David Spade commercials from CapitalOne that portrayed frequent flyer programs as never having any award seats available. Research has shown that there have been a number of travelers who have wandered off to other types of credit cards because of the “no award seats available” image that the industry has been saddled with.

    With our “best idea” label back in January, we felt (as we do today) that this is a conceivable “first step” toward addressing this issue of the industry-in essence, creating a level of transparency with the members of these programs about the number of seats available. Other airlines are starting to chip away at other solutions. Take, for instance, the new booking tool that JetBlue offers its TrueBlue members. It actually shows you the number of seats available to members, rather than relying on the current industry model of showing only “yes or no.” Reminds us of the “chicken or beef” image the airline food used to have.

    But while the idea of “miles as money” for award redemption caught our eye early on, it’s the execution that United Mileage Plus is showing with their Mileage Plus Choices program that impresses us, and we ARE impressed.

    But before we get into the actual program, let’s switch gears just a little and visit with the Air New Zealand Airpoints program. Back in 2004, this airline surprised the world of frequent flyer programs by dumping its traditional award-chart-based loyalty program and introducing two things: a program based on money spent (that’s not the target of this article), and more importantly, an award redemption system where every mile is used as money to purchase any available seat in inventory. But let’s be reasonable — Air New Zealand is hardly the size of United Airlines. A smaller airline could reinvent itself as they did and work through the challenges from members whom the new program did not satisfy.

    The program allows members to book any seat on any Air New Zealand flight. The Air New Zealand Airpoints Dollars replaced Airpoints as the program currency, and are used like cash when booking seats. One Airpoints Dollar is equivalent to one New Zealand dollar.

    While members earn less of the loyalty points on long-haul flights, they get greater rewards from short flights, most domestic flights and Tasman and Pacific Island fares.

    The single caveat of the program is that at the beginning, an award could not have been paid for with a mixture of Airpoints Dollars and regular money. Apparently Mileage Plus and their banking partner Chase have studied this closely enough, since they are launching without this restriction.

    What Air New Zealand found is that it was not necessarily harder for members to earn enough “Dollars” in the new redemption process, contrary to the initial fears of members. It said 61 percent of flight redemptions would require fewer equivalent points to purchase the lowest fares, and 15 percent of redemptions would require the same number of points. In our review of the Choices program, we see the same types of numbers being forecast.

    OK, enough of the background. Exactly what is Mileage Plus Choices? Well, Ken Feldman, United’s vice president of loyalty and e-commerce, tells us that its really an enhanced benefit: “Choices enhances the benefits of Mileage Plus redemption, specifically for Visa cardholders, and redeeming Choices is as simple as going to united.com to purchase a ticket as frequent flyers do today.”

    We don’t disagree, and caution members to not think of this as a replacement for Mileage Plus miles, even though we have tried to point out that this concept may expand into the normal way all members earn and burn their miles, regardless of credit card affiliation.

    The initial difficulty with this program is for members to understand they will have to get used to a dual currency within Mileage Plus. (Maybe its a good idea that United got rid of their “old miles” a few years back).

    Members using the Chase Visa cards issued by Mileage Plus will earn normal miles for those purchases, but they have a dual purpose. The miles earned can also be used on united.com for airline, hotel and car rental purchases. Figuring out the value of both currencies, your normal Mileage Plus miles and the Choices miles is something that will take a little time but will be worth the effort to manage.

    Before we go any farther, we must note that there is a way for you to really max out on this program. United currently has four credit cards for their members here in the U.S. If you have anything other than the Platinum Class Visa Signature Card, we highly suggest-no, make that, we order you-to acquire this card. Introduced last fall, it has several benefits available to you that can truly make the Choices program the most important frequent flyer program you have. With this card, you earn double redeemable miles for every dollar charged on everyday purchases including groceries, dining, gas at the pump, and home improvement. It mimics the double miles advantage that the American Express cards have within Membership Rewards and with Delta SkyMiles. And while we’re not trying to sound like a salesman for this card, you can earn up to 15,000 Elite Qualifying Miles in your first year (like the ones you earn by flying), plus up to 10,000 each year after that. Here’s how:

  • 5,000 Elite Qualifying Miles after your first purchase
  • 5,000 Elite Qualifying Miles when you spend $35,000 each year with your card
  • Up to 5,000 Elite Qualifying Miles for ticket purchases at united.com (1 mile per $1) each year

    Obviously this increases the number of miles you will then be able to use with the Choices program.

    Cashing In
    What we like best is that if you are smart, there are an unlimited number of ways you can work this program to your advantage, though it will require just a little more work. For instance, when you decide to redeem a domestic award, always start with “pricing it out,” using miles from the Choices program. Let’s say you price out an award from San Francisco to Phoenix. Given the competitive market and airfare sales, you might be able to snag a seat for $159 roundtrip. Using the Choices program this will cost you 15,900 Choices miles, far fewer than the 25,000 miles you might have had to pay if seats were available using your normal miles.

    Q/A
    To help you get a sense for what this program is and what it is not, we’ve gleaned some of the following FAQ’s from the united.com Web site to help you along.

    What is Choices?
    Choices are a new kind of Mileage Plus currency that goes beyond Redeemable Miles. You can earn five new kinds of awards that are only available by redeeming Choices. Choices are earned for Mileage Plus credit card use. For more information on Choices, view the Choices demo.

    How do Choices make the Mileage Plus program better than other rewards programs?
    When you fly United, United Express, or Ted or Star Alliance on a ticket purchased using your Chase Mileage Plus credit card on united.com: You earn Choices for the purchase. As with all purchased tickets, you earn Mileage Plus Redeemable Miles and Elite Qualifying Miles/Elite Qualifying Segments when you complete the flight. You earn a mileage bonus for booking on united.com.

    You can redeem Choices for:
    A statement credit against the purchase of any available seat on any available flight purchased on united.com, as well as any car rental purchased at www.united.com/cars or hotel purchased at www.united.com/hotels with your Mileage Plus credit card — No blackouts. Economy Plus Access Elite Qualifying Miles/Elite Qualifying Segments.

    Even though you redeemed Choices for your airline ticket, will you still earn Redeemable Miles and Elite Qualifying Miles/Elite Qualifying Segments for the flight?
    Yes.

    How does one sign up to earn Choices?
    To earn Choices, you must have a Mileage Plus credit card. If you have the card, you will earn Choices automatically. Any eligible card activity, beginning with your January 2006 credit card statement, earns you Choices.

    How do I find out how many Choices I have?
    Your Choices balance can be found at the My Choices Summary on the Mileage Plus Web site. You must have previously earned Choices and be a valid Mileage Plus credit cardmember to be able to log in. To see the activity that earned you Choices, visit your Mileage Plus summary and look for transactions that say “Choices.”

    How many Choices can I earn?
    The number of Choices you can earn is limited by the rules of your Mileage Plus credit card agreement that govern the number of Redeemable Miles you can earn with your card. For example, most Mileage Plus Signature Visa cards limit earning to 10,000 Redeemable Miles per month up to 60,000 per year. However, for Mileage Plus members with elite status, there is no limit to the number of Choices earned.

    Do Choices expire?
    Choices may not expire as long as you earn additional Choices or redeem Choices at least once every 36 months. However, to redeem Choices against an eligible purchase for a Mileage Plus credit card statement credit, you must submit the statement credit request with 90 days of the purchase transaction date.

    Is the Choices program available for international travel?
    Yes, Choices can be redeemed for any air travel booked on united.com with your Mileage Plus credit card, including flights on Star Alliance partners. The program is not available to residents outside the United States.

    Can United guarantee with the Choices program that I’ll get any available seat, anytime?
    As long as united.com is still offering seats on a flight, you can purchase the ticket with your Mileage Plus credit card and redeem Choices for a statement credit against the price of the ticket within 90 days. Read the Choices terms and conditions.

    What is a statement credit in relation to the Choices program?
    A statement credit is the dollar value credited back to your Mileage Plus credit card account when you redeem Choices at www.united.com/chase.

    Can I purchase, transfer or give Choices?
    No, not at this time.

    I have a Mileage Plus MasterCard not a Visa. Am I still eligible to earn and redeem Choices?
    Yes.

    Who can you call if these FAQs have not answered your questions?
    Please contact united.com customer support at 1-800-589-5582, option 3.

    Earning Choices

    How do I earn Choices?
    Choices are earned with your Mileage Plus credit card for eligible card activity beginning with your January 2006 credit card statement. Choices are earned for credit card purchases, enrollment, Chase credit card promotional offers, anniversary renewals, and other eligible card activity. Chase non-credit card activity, such as debit/check card purchases or Home Equity, do not currently earn Choices but will earn Mileage Plus Redeemable Miles. Choices are available only for eligible activity rewarded by Chase and are not earned for third-party, partner bonuses associated with use of the Mileage Plus credit card. Choices earned will be reflected in your Mileage Plus account within 6-8 weeks after qualifying activity is completed.

    Will I get Choices for my previous Mileage Plus credit card activity?
    Choices are earned with your Mileage Plus credit card for eligible card activity beginning with activity shown on your January 2006 credit card statement. Redeemable Miles earned for previous credit card activity can still be redeemed for traditional Mileage Plus awards. Since Choices are reflected in your Redeemable Miles balance, they can also be used for traditional Mileage Plus awards.

    Redemption of Choices will always result in an equivalent reduction in your Redeemable Miles balance. However, redemption of Redeemable Miles will only result in a reduction in the number of Choices in your account if your Mileage Plus balance falls below your Choices balance.

    Do I earn Choices for using my Mileage Plus Check Card?
    No. Currently, you can only earn Choices by using a Mileage Plus credit card.

    Can I use my Chase Mileage Plus Visa card to purchase tickets on united.com for a friend or family member and still receive Choices in my Mileage Plus account?
    Yes.

    Redeeming Choices

    How do I redeem Choices?
    Choices go beyond redeemable miles because, in addition to traditional awards, Choices can be redeemed for new, exclusive awards, such as: A statement credit for any available seat on any available flight booked on united.com and purchased with your Mileage Plus credit card, with no blackout dates. A statement credit for any car rental purchased at www.united.com/cars or hotel purchased at www.united.com/hotels with your Mileage Plus credit card — No blackouts. Plus redeem for Economy Plus Access and select Elite Qualifying Miles. You can redeem Choices at www.united.com/chase.

    How do I redeem Choices for air travel?
    Choices can be redeemed for a Mileage Plus credit card statement credit against the purchase of any available seat on any available flight booked on united.com and purchased with your Mileage Plus credit card. For step-by-step instructions on how to redeem Choices for air travel, go to www.united.com/choicesair. Flights purchased other than on united.com, such as through United Reservations, travel agencies or other travel web sites, are not eligible.

    How many Choices do I need to redeem for air travel?
    The number of Choices required to redeem for air travel depends on the price of the ticket and can be found by going to the Choices air travel redemption page at www.united.com/choicesair and inputting the price of the ticket. To make sure you have enough Choices to redeem, you should visit the Choices air travel redemption page to calculate the number of Choices required before you purchase your ticket.

    Is there a minimum number of Choices I can redeem?
    A minimum of 10,000 Choices is required for air travel redemption. Choices redemptions for flights below the minimum dollar redemption will all require 10,000 Choices. Therefore, redeeming at lower price levels may result in a lower redemption value for your Choices. There is no Choices minimum for hotel or car rental redemptions.

    When can I redeem Choices?
    You can redeem Choices for a Mileage Plus credit card statement credit up to ninety (90) days after the purchase transaction date. Once 90 days have passed, you will no longer be able to redeem Choices for a statement credit against that purchase. Choices can be redeemed for other items like Economy Plus Access or Elite Qualifying Miles at any time.

    What does “redeem Choices for any car with no blackouts” mean?
    Choices can be redeemed against any car rental booked on united.com at www.united.com/cars. There are no blackout dates for Choices car rental redemptions, because as long as there are cars available for rental, you can pay for the rental with your Mileage Plus credit card and redeem Choices.

    Bottom line: We do hate sounding like this is the best thing since sliced bread, but when used properly, we can’t think of anything that has added this much value for the members of any frequent flyer program since 1988. If you follow our advice for changing to the United Platinum Visa, your world of award redemption is going to change over-night. This program serves notice worldwide that United Mileage Plus does have a very clear strategy in leveraging their program for the days and years ahead, and it quickly puts behind any memories of their financial challenges.

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